Along with his father and former intelligence chief Abdullah al-Senussi, Seif is wanted by the International Criminal Court for alleged crimes against humanity.
Among those killed in the barrage was senior commander Daou al-Salhine al-Jadak, whose car was struck by a rocket as he headed towards the front, NTC chief negotiator Abdullah Kenshil told AFP.
Jadak, one of the highest ranking NTC commanders in Bani Walid and who hailed from the town, told AFP two days before his death that he had been imprisoned for more than 18 years for helping organise a 1993 rebellion.
An AFP correspondent said that despite heavy use of tanks, rocket launchers and artillery, the NTC forces had not advanced from positions held for the past few days in the desert town 170 kilometres (100 miles) southeast of Tripoli.
"There is always incoming missile and artillery fire. We are returning fire with heavy weapons but we are not sending in infantry. We are waiting for reinforcements," Captain Walid Khaimej told AFP.
"NATO is here but is not doing enough. They take out the rocket launchers firing at us, but they are immediately replaced. We need more help from NATO."
Under a UN mandate, the alliance has been giving air support to the popular revolt that erupted in February and forced Kadhafi out of Tripoli and into hiding last month.
It has scaled down the intensity of its strikes, based on its daily operational updates which show it has taken out targets in Bani Walid on just one of the past three days.
But Colonel Roland Lavoie, the air campaign's military spokesman, said "NATO has not reduced its activity in Libya," noting alliance aircraft had conducted at least 100 sorties per day in the past few days.
"The number of strikes depends on the danger against the civilian population, in conformity with our mandate," Lavoie told AFP in an email.
NTC losses were almost as bad in Sirte, where fighters are battling their way to the heart of the sprawling Mediterranean city, site of a Kadhafi compound and bunkers.
In Tripoli, defence ministry spokesman Ahmed Bani noted that they now control Sirte's port, air port and air base.
"We are also controlling north of the city now and our fighters advanced some kilometers from the east side of Sirte."
"We won't lose this battle; it's a matter of days."
But the fighting is bloody, and the NTC expect a ferocious fight for control of the compound, the nerve centre of the remaining resistance, where some of Kadhafi's family are thought to be holed up.
Bani said "what we are sure of and what we know is that (Kadhafi son) Seif al-Islam is in Bani Walid, while his brother Mutassem is in Sirte".
"We will search for Kadhafi (himself) after all of Libya is freed, and his (location) is not a matter of concern for us now."
In his radio message, a transcript of which was carried by a loyalist website on Tuesday, Kadhafi said he was still fighting and was ready to die a martyr.
"Heroes have resisted and fallen as martyrs and we too are awaiting martyrdom," Kadhafi said.
He praised the fierce resistance put up in Bani Walid, which had been a major recruiting ground for his elite army units.
"You should know that I am on the ground with you," he said. "Through your jihad, you are imitating the exploits of your ancestors."
In Sirte, a commander who asked not to be named said "more than 10 of our fighters have been killed (on Tuesday) in face-to-face fighting near Mahari Hotel."
NTC fighters and Kadhafi diehards clashed "in street fights and shot at each other from close range with Kalashnikovs and rocket-propelled grenades," he said.
At a field hospital east of the city, Dr Yusuf al-Badri said NTC casualties mounted after "a very bad day" on Tuesday when eight of them were killed and almost 50 wounded.
"One fighter was killed today and five wounded so far," he told AFP, while a commander said there were two killed.
Thousands of fearful civilians have been fleeing Sirte, 360 kilometres (225 miles) east of Tripoli, as the new regime's forces close in from the east, south and west.
Meanwhile, interim justice minister Mohammed al-Alagi said Libya's new authorities were ready to assist if asked to provide people for questioning over the 1988 Lockerbie bombing.
"We are ready to cooperate if more people were asked to be investigated in the Lockerbie case," Alagi told a news conference in Tripoli.
Prosecutors in Scotland said Monday they have formally asked the NTC to help with the probe into the attack on Pan Am flight 103, which killed 270 people when it exploded over the Scottish town of Lockerbie on December 21, 1988.
Separately, Alagi said that Libya has issued a summons for Kadhafi's former prime minister Baghdadi al-Mahmudi, who showed up in Tunisia last week after fleeing the country.